ML20236N958

Applicant Response to Intervenors Petition to Waive Regulations 50.33(f) & 50.47(4) to Extent Necessary to Require Applicant to Demonstrate Financial Qualification to Operate & Decommission Plant.* W/Certificate of Svc

ML20236N958
Person / Time
Site:	Seabrook
Issue date:	08/07/1987
From:	Dignan T PUBLIC SERVICE CO. OF NEW HAMPSHIRE, ROPES & GRAY
To:	Atomic Safety and Licensing Board Panel
References
CON-#387-4182 OL-1, NUDOCS 8708120168
Download: ML20236N958 (9)

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Dated: A5dIst 7, 1987 UNITED STATES OF AMERICA 87 AUG 10 A11 :07 NUCLEAR REGULATORY COMMISSION 6Fi n before the 00Ct4 4 ~ 2 new ATOMIC SAFETY AND LICENSING BOARD

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In..the Matter'of )

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PUBLIC SERVICE COMPAhY ) Docket Nos. 50-443-OL-1

. 0F NEW HAMPSHIRE, . ET AL. ) 50-444-OL-1

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(Seabrook Station, Units 1 ) (Onsite Emergency and:2) ) Planning and Safety

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' APPLICANTS 8 RESPONSE TO INTERVENERS' PETITION TO WAIVE REGULATIONS 50.33(f) AND 50.47(4) TO THE EXTENT NECESSARY TO REQUIRE APPLICANTS TO DEMONSTRATE FINANCIAL QUALIFICATION TO OPERATE AND TO DECOMMISSION SEABROOK STATION Under date of' July 31, 1987, the Town of Hampton (TOH), the New England Coalition on Nuclear Pollution (NECNP), and Seacoast

' Anti-Pollution League (SAPL) (hereafter " Interveners") filed a Petition to Waive Regulations 50.33(f) and 50.47(4) (sic) to the Extent Necessary to Reauire Applicants to Demonstrate Financial

~ Qualification to Operate and to Decommission Seabrook Station.

.For the reasons set forth below, the Applicants state that a determination.should be made pursuant to 10 CFR 2.758(c) that no l

prima facie showing-has.been made.1 1The Appeal Board has directed that, despite any possible jurisdictional questions'which may be involved, the Licensing Board is to entertain the petition at bar in the first instance.

Public Service Company of New Hampshire (Seabrook Station, Units 1 and 2), Unpublished Memorandum and Order (Aug. 4, 1987).

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PDR' ADOCK 05000443;

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t 6L To begin with, the petition.is. premature. The gravamen of

.the petition-is a so-called 8-K filed by Public Service Company of New Hampshire (PSNH). That document states that in the event that?PSNHiis not successful in its efforts, together with-its investment: bankers, in coming up with a financial plan within a relatively'short time,- "it will be difficult, if not impossible, for the Company to. avoid proceedings under the Bankruptcy Code."

The 8-K does not state that PSNH will fail in its efforta.

In any event.the Interveners take the position that the alleged "likely bankruptcy of Applicants'-lead owner is without precedent." To the-contrary, there is precedent and it does not support the' position of the. interveners.

In the Shoreham proceeding, the Licensing Board dealt with-a similar petition.

Long Island Lighting Co. (shoreham Nuclear Power Station, Unit 1), LBP-84-30, 20 NRC 426, 430-36 (1984).. Therein, the Licensing Board fully examined the history of the Commission's Financial Qualifications rule and' reached the conclusion on facts similar, if not congruent, to those at bar that no prima facie showing had i

been made. Inter alia, the Shoreham Licensing Board observed-l "In' order to show that the regulations should j

'be waived, Interveners would have to show I that LILCO cannot recover its operating costs through rate regulation. Interveners have indicated that'the New York Public Service Commission has instituted a prudency investigation and that its Staff has proposed to deny $1.8 billion in Shoreham related construction costs. Yet this proceeding has not been concluded and thus its outcome remain, wholly speculative." 20 NRC at 433 2

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(Emphases in original).2 1 fa "Nor does this situation present issues of f considerable, safety significance'for which a reasonable asnurance now of the future outcome of the rate proceeding would be desireable. Interveners do not allege that any particulst safety. problems result from i, LILCO's " dire' financial. situation; and apparently none exist. In. fact, their only fear is that "the citizens of the State and J

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County could be faced with an irradiated plant whose owner cannot afford to operate,~

shut it down. or clean it up safely." [ Record j Cite].- Although possible, it is not probable that this fear . vill be realized. It is unlikely.that L4LCO would not be found financially qualified to-operate Shoreham if j

and when itfsatisfies all applicable NRC 1 prerequisites-to operation. In addition, the

'New York: State.PUC is unlikely to deny LILCO j reasonable operating costs, if,and when Shoreham commences commercial operation, .

since it has generally done so." Id. at 433-34 (footnote'omitted, emphases added).

The above quoted language from the Shoreham decision highlights two faults in the Petition at~bar. First, it is speculative as to whether or not the event which is a prerequisite to its having even surface validity (the seeking of protection under the Bankruptcy Code by PSNH) will, in fact J

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8 Per contra, .a draft report issued by the consultant hired j by PSNH's regulator, The New Hampshire Public Utilities j Commission, has. tentatively concluded that approximately $333.5  !

million of_the total to date cost of Seabrook, $4.8 billion, (or {

approximately'seven per cent).was imprudently incurred. See New i Hampshire Public Utilities' Commission, Executive Summary, Review ]

of the' Reasonableness of the Costs and Management of the Seabrook l Station,. Touche Ross and The Nielsen-Wurster Group, July 1987, passim.1 While this does not, of course, mean that the NHPUC will agree fully with its consultants, it certainly places PSNH in a better situation vis-a-vis its rate regulator than existed when

~t he Shoreham' petition was dealt with by the Licensing Board in A

that case.

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occur. Second, the petition misstates what the special circumstance are that would have to exist before a prima facie i

showing could be made.

With respect to the latter matter, the Petition, after I

highlighting the portion of the Statement of Basis published by '

the Commission in 1984 when the current Financial Qualification j Rule was promulgated that emphasizes the Commission's power under 2.758 to waive the rule, see Petition at 7, goes forward on the I

assumption that the Commission therein said something it did not say. .The Commission did not say that Bankruptcy (or other financial problems of the operating utility) per se could result in an exception or a waiver under 10 CFR 2.758. Rather the

" threshold showing"'that had to be made was that:

"[T]he local public utility commission will not allow the total cost of operating the facility to be recovered through rates." 49 Fed.-Reg. 35751 (Sept. 12, 1984).

In other words, it is the attitude of the relevant rate regulator _that is crucial, not the question of whether the operator may go into reorganization. The Petition does not even begin to address the attitude of the New Hampshire Public Utility Commission towards allowing sufficient funds to be recovered to i

cover ell operating costs of Seabrook.8 This is fatal, we 8Possibly in recognition of this deficiency, the Interveners spend a great deal of time discussing the so-called " anti- QUIP" laws in New Hampshire. Petition at 4-5. However, there is nothing unusual about Seabrook's situation. Any haclear power plant which is denied a full power license will create a problem of the same nature as conjured up in the Petition for Seabrook.

A request for waiver cannot be premised upon an assumption that a full power license will be denied. See Long Island Lighting Co.

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e submit. Again the words of the Shoreham Licensing Board are instructive:

"In the present context of financial qualifications, there is no basis to speculate even if Interveners' most dire financial forecasts are realized, that the plant could not be operated in accordance with all safety requirements by either a restructured LILCO or by some other entity.

This would be subject to an NRC assessment of any significant change in the entity proposing to operate the Shoreham plant (e.g., LTLCO in some form of bankruptcy or a different utility operator) if and when such a proposed change is necessitated by the outcome of the State rate proceedings or other circumstances. Indeed, based on the PSC's general position [ cite to footnote following], it is more speculative to assume that no entity would be permitted the rate relief to cover the costs of operation of Shoreham than it is to assume that there would be a variety of financial arrangements which would permit some qualified entity to do so. For example, an entity not saddled with LILCO's present terms of debt service on construction funds could need a lesser degree of rate relief than LILCO would to cover its costs." Id. at 433 n. 7 (first emphasis added).

Substitute "PSNH" for "LILCO" in the immediately above quoted statement, and it would be equally applicable, on all fours, and dispositive.

The final attempt to save this deficient petition is to include more rank speculation as to what might occur in the event a trustee is appointed in a bankruptcy proceeding. Petition at 6-7. Prescinding from the fact that the appointment of a trustee (Shoreham Nuclear Power Station, Unit 1), CLI-83-17, 17 NRC 1032 (1983).

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L in a Chapter.IX proceeding is, by no means, automatici it is fair 1

to assume.that any trustee who is appointed will do everything he or'she can to preserve the major asset of the. debtor. In the

' case of PSNH,- the major asset is Seabrook.

CONCLUSION A determination should be made that no prima facie showing has'been made.

Respectfully submitted, e'

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Thomas 'G'. D George H. Lecald $ n, Jr.

Kathryn A. Selleck Ropes & Gray 225 Franklin Street Boston, MA 02110 (617) 423-6100

> Counsel for Applicants 1

• See 11 U.S.C. 1104(a).

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CERTIFICATE OF SERVICE

'87 AUG 10 A11 :07 I, Thomas G. Dignan, Jr., one of the attorneys for the Applicants herein, hereby certify that on August $ ,.1987, I made service of the within document by mailing copies: .

thereof, postage prepaid, to:

Administrative Judge Sheldon J. Stephen E. Merrill, Esquire {

Wolfe, Esquire, Chairman Attorney General Atomic Safety and Licensing George Dana Bisbee, Esquire Board Panel Assistant Attorney General U.S-. Nuclear Regulatory Office of the Attorney General Commission 25 Capitol Street Washington, DC 20555 Concord, NH 03301-6397 Dr. Emmeth A. Luebke Dr. Jerry Harbour Atomic Safety and Licensing Atomic Safety and Licensing Board Panel Board Panel U.S. Nuclear Regulatory U.S. Nuclear Regulatory Commission Commission Washington, DC 20555 . Washington, DC 20555 Robert Carrigg, Chairman Diane Curran, Esquire Board of Selectmen Andrea C. Ferster, Esquire Town Office Harmon & Weiss Atlantic Avenue Suite 430 North Hampton, NH 03862 2001 S Street, N.W.

Washington, DC 20009 Atomic Safety and Licensing Sherwin E. Turk, Esquire Board Panel Office of the Executive Legal U.S. Nuclear Regulatory Director Commission U.S. Nuclear Regulatory Washington, DC 20555 Commistion Washington, DC 20555 Atomic Safety and Licensing Robert A. Backus, Esquire .

Appeal Board Panel Backus, Meyer & Solomon  !

U.S. Nuclear Regulatory 116 Lowell Street Commission P.O. Box 516 Washington, DC 20555 Manchester, NH 03105 Philip Ahrens, Esquire Mr. J. P. Nadeau Assistant Attorney General Selectmen's Office Department of the Attorney 10 Central Road General Rye, NH 03870 Augusta, ME 04333

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Paul McEachern, Esquire Carol S. Sneider, Esquire Matthew T. Brock, Esquire Assistant Attorney General Shaines & McEachern Department of the Attorney General 25 Maplewood Avenue One Ashburton Place, 19th Floor P.O. Box 360 Boston, MA 02108 l Portsmouth, NH 03801 Mrs. sandra Gavutis Mr. Calvin A. Canney Chairman, Board of Selectmen City Manager ,

RFD 1 - Box 1154 City Hall  !

Kensington, NH 03827 126 Daniel Street  !

Portsmouth, NH 03801 Senator Gordon J. Humphrey Mr. Angie Machiros U.S. Senate Chairman of the Washington, DC 20510 Board of Selectmen (Attn: Tom Burack) Town of Newbury Newbury, MA 01950 Senator Gordon J. Humphrey Mr. Peter S. Matthews One Eagle Square, Suite 507 Mayor Concord, NH 03301 City Hall (Attn: Herb Boynton) Newburyport, MA 01950 Mr. Thomas F. Powers, III Mr. William S. Lord Town Manager Board of Selectmen Town of Exeter Town Hall - Friend Street 10 Front Street Amesbury, MA 01913 Exeter, NH 03833 H. Joseph Flynn, Esquire Brentwood Board of Selectmen Office of General Counsel RED Dalton Road Federal Emergency Management Brentwood, NH 03833 Agency 500 C Street, S.W. .

Washington, DC 20472 Gary W. Holmes, Esquire Richard A. Hampe, Esquire Holmes & Ells Hampe and McNicholas 47 Winnacunnet Road 35 Pleasant Street Hampton, NH 03841 Concord, NH 03301 Mr. Ed Thomas Judith H. Mizner, Esquire FEMA, Region I Silverglate, Gertner, Baker 442 John W. McCormack Post Fine, Good & Mizner Office and Court House 88 Broad Street Post Office Square Boston, MA 02110 Boston, MA 02109 4

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Charles P. Graham, Esquire McKay, Murphy and Graham 100 Main Street Amesbury, MA 01913

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